Indianapolis businessmen Tim Durham and James Cochran, who bought Fair Finance Co. in Akron back in 2002, have received most of the publicity after their arrests on fraud charges in March.
But Rick Snow, chief financial officer for Durham-owned Obsidian Enterprises and Fair Finance, was also indicted and arrested in what federal investigators say was a scheme that defrauded 5,300 Ohio residents and organizations out of more than $200 million in investment certificates purchased from the now-bankrupt company.
Durham, Cochran and Snow are the only three people charged and arrested in the case so far. Durham and Cochran are accused in part of borrowing money from Fair Finance to live a lavish lifestyle and of loaning money to others that was never repaid.
A trial is tentatively set to start June 8, 2012, in U.S. District Court in Indianapolis.
More than a year is needed ''given the complexity of the case, the significant amount of discovery anticipated to be exchanged, and in order to give counsel adequate time to prepare,'' federal judge Jane Magnus-Stinson ruled.
Snow, a 47-year-old Indiana resident with Northeast Ohio roots, appears to have joined Durham and Cochran's business ventures because of a previous professional relationship with Fair Finance.
Snow's attorney, Indianapolis lawyer Tom Farlow, said he doesn't understand why his client was arrested. Farlow said Snow did nothing wrong.
''It's mystifying to me that he would be indicted in this matter,'' Farlow said. ''I don't think the facts support it.''
Snow remains in the Indianapolis area and is living under court-imposed restrictions, Farlow said.
''I know that he's working,'' he said. The lawyer said Snow's wife operates a small business.
Farlow said Snow years ago received a ''swing loan'' from Fair Finance to finance a house and that loan was promptly repaid by selling another residence. Snow did not bor
row any other money from the business, he said.
Snow has a reputation as an honorable and competent person, Farlow said.
Snow's early career
Snow's road to Fair Finance started after he graduated from Kent State University business school and became a certified public accountant in 1987, working for accounting firm Grant Thornton LLP.
Snow joined Akron firm Brockman, Coats, Gedelian & Co. in 1991, according to a short biography included in Fair Finance documents.
''Fair Finance was a longtime client of ours,'' said Dave Brockman, managing director of the accounting firm. ''We did work for over 20 years.''
Snow worked his way up at the regional accounting firm, taking on increased responsibilities, based on published statements from the Akron firm. For instance, Brockman, Coats, Gedelian in September 1995 announced that Snow was promoted to audit and accounting manager. And in March 1996, the firm announced that Snow was part of its new Construction Services Group.
Brockman said he could add little about Snow's time at his firm other than he was a senior manager who worked on the audit side of the business. Policy is not to comment about former employees, he said.
Snow ''left for an opportunity to go work for the owners of Fair Finance,'' Brockman said. ''He worked on the Fair Finance audit.''
Starting at Fair Finance
In 2002, Snow became chief financial officer of Fair Finance Co., according to Fair Finance and Obsidian company filings.
In April 2003, Obsidian Enterprises in Indianapolis announced that Snow had become executive vice president and chief financial officer there, too.
''At Fair Finance, Snow oversees the financial management of the company, including financial reporting, tax compliance, systems implementation and strategic planning,'' a news release said.
The Obsidian statement said that while at Brockman, Coats, Gedelian, Snow worked as senior manager overseeing business and assurance services and business advisory services, and had extensive experience in mergers and acquisitions. Snow belonged to professional groups and ''served in several leadership roles for [unnamed] civic and charitable organizations.''
The news release quoted Durham: ''Rick Snow brings extensive financial and auditing experience and I know that he will be an invaluable asset to Obsidian.''
And it quoted Snow: ''I am pleased to join Obsidian's team and I look forward to contributing to the company's growth and increasing shareholder value.''
Snow became involved in other Indiana businesses.
Fortune Industries Inc. in Indianapolis, a professional employer organization, announced on Nov. 10, 2008, that Snow was elected to its board of directors. Snow filled a vacancy when the company increased the number of board seats from five to six and was named chairman of Fortune Industry's audit committee.
A little over a year later, in December 2009, Snow resigned from the board.
Fortune Industries said in a statement, ''Mr. Snow's resignation was not due to a disagreement with the company on any matter relating to the company's operations, policies or practices.''
But just weeks earlier, on Nov. 24, the FBI had raided the Akron offices of Fair Finance and the Indianapolis offices of Obsidian Enterprises, carting off computers and boxes of records.
And some 16 months later, in March 2011, a federal grand jury indicted Snow, Durham and Cochran.
Snow and Cochran were arrested in Indianapolis and released under house arrest. Durham, who was living in Los Angeles and running comedy moviemaker National Lampoon, was arrested there and returned to Indianapolis. A judge ordered Durham to live in an Indianapolis halfway house until he could produce better financial records.
The indictment in part said:
''From shortly after Durham and Cochran purchased Fair in 2002 through November 2009, defendant Rick D. Snow, a certified public accountant, was the chief financial officer of Fair. As CFO, Snow was responsible for maintaining Fair's books and records. Snow regularly consulted with Durham and Cochran about the financial status of Fair, including Fair's revenue and loss records, investment decisions and the reporting of financial information to the [Ohio] Division of Securities and to investors. Snow maintained his principal business operations in Indianapolis, Indiana.''
The indictment said, ''The purpose of the scheme was to enrich Durham, Cochran and Snow. . . . ''
The court document said that Durham, Cochran and Snow concealed from investors that Fair's financial condition had ''sufficiently deteriorated due to the millions of dollars in nonperforming loans that they had made with Fair investor money.''
The charges say that accountants in 2005 warned Durham, Cochran and Snow about loaning Fair Finance money for personal use and to Durham's failing businesses. The warnings included such things as saying loans were impaired and had insufficient collateral.
The three men fired accounting firms that criticized their use of Fair Finance money, the indictment reads.
Durham, Cochran and Snow never released audited financial statements for 2005 and never obtained or released audited financial statements for 2006, 2007, 2008 and through September 2009, according to the court documents.
'' . . . Durham, Cochran and Snow made false and misleading representations about Fair's financial condition,'' the indictment said. '' . . . Durham, Cochran and Snow falsely represented, in registration documents and offering circulars submitted to the [Ohio] division of securities and in offering circulars distributed to investors, that the loans on Fair's books were assets that could support Fair's sale of investment certificates when they knew in reality that the loans were worthless or grossly overvalued, producing little or no cash proceeds, supported by insufficient or nonexistent collateral to assure repayment, and in part advances, salaries and lines of credit for Durham and Cochran's personal expenses.''
Jim Mackinnon can be reached at 330-996-3544 or firstname.lastname@example.org.